Aruba, december 5, 2014 - In order to reduce dependence on one single supplier, the European Union (EU) must further diversify gas and oil supplies, and cannot afford to reduce its energy options: nuclear, coal and unconventional gas and oil will need to be part of the mix, the International Energy Agency (IEA) said in its review of EU energy policies.

However, the new IEA report said there remains much room for improvement. It noted that much of the integration of Europe’s energy market has been confined to northern and western parts of Europe, and that until important interconnections are built across the entire bloc, the EU will not have a truly integrated, single energy network – the basis for an “Energy Union”. Moreover, despite reforms at the wholesale level, markets are increasingly distorted by the persistence of regulated prices and rising green surcharges and levies.

In the report, Energy Policies of IEA Countries: European Union – 2014, the IEA praised the EU for reducing its carbon intensity and taking the lead in vehicle fuel economy standards. Thanks to the implementation of 20-20-20 targets, lower energy intensity and an unprecedented boom in renewable energies can be witnessed.

EU leaders agreed in October 2014 to ambitious climate and energy targets for 2030. Now, the legal framework must be put in place, with market rules for a low-carbon system.

The transition to such a low-carbon system remains challenging, as electricity and transport sectors rely heavily on fossil fuels. This requires the swift reform of the EU Emissions Trading Scheme (EU ETS) and support to investment in low-carbon technologies.

“As member states adopt different energy policy choices and decarbonisation pathways towards 2030, a strong ‘Energy Union’ is needed to achieve the EU 2030 goals. But let’s be clear: such a union should not represent a buyer’s cartel. Rather, it should feature an integrated energy market and effective climate and energy policies,” said IEA Executive Director Maria van der Hoeven.